Free Yourself From Slavery
Wednesday, 10:45 AM
Dear Friend,
I don't really have many outward signs of success.
I live in a middle class neighborhood…
My uniform of the day is usually jeans, a t-shirt and gym shoes….
I don't belong to a country club, don't hang out in swanky night spots or go out to fancy restaurants.
My mom grew up dirt poor in Mississippi, many times going for days without anything to eat. One time she didn't even have any shoes and had to go around barefoot for over a month.
When I was a kid growing up, my mom, sister and I lived a lower middle class existence in Barberton, Ohio. I had no idea we were that far down on the socio-economic scale until I was much older.
When I got older I did what was expected from somebody of my low economic status… I set my expectations very low and got a dead end civil service job.
That's the kind of environment I grew up in. I learned about money by observing what my parents did and said.
That's probably the reason I've never really gone hog wild buying the trappings of success.
I guess I do have one kinda cool car. I bought it used. Enjoyed it for a while but now it's just a pain in the ass.
The mechanic just called with a $3,000+ estimate for some "minor repairs". I should have known better than to buy a luxury car.
Oh yeah… one other little "trapping of success"…
I bought a Rolex a few years ago.
I lusted after that watch for over 15 years. For me, it represented success. I was so excited when I first bought it. Now it never leaves the house. My $100 Citizen looks great and keeps better time than my $10,000 Rolex.
You see, I've made a lot of mistakes with money.
I seem to have the same problem as Gary Halbert… it's a lot easier to make it than KEEP it.
Here's how I finally figured out how to solve most of my money problems:
- Read and internalize The Richest Man In Babylon and…
- Follow the Doberman Dan #1 Rule of Money Management…
If You Can't Pay For It In Full…
Don't Buy It!
Call me crazy, but in my book, that includes your residence, too.
If there's a mortgage, note, lien or loan against it… it's not yours… and the REAL owner can take it away at any time.
Even if you pay on time month after month for 29 years and 11 months and 29 days… but don't make that last remaining day's payment of $33.33… the mortgage holder (the REAL owner) will put you in foreclosure and take your house back.
Trust your uncle DD… I knoweth of which I speaketh. I learned it the hard way.
The borrower is slave to the lender.
You can't be free if you're in debt.
So do whatever it takes to get out of debt. Then STAY out of debt with DD's #1 Rule of Money Management…
If You Can't Pay For It In Full…
Don't Buy It!
I know a few guys making $750,000 a year… and still dead broke.
Sure, they've got the new Mercedes, wifey drives a new Escalade and they live in a McMansion… but I always have to pay for lunch because they don't have the $40 to cover the check.
Seriously.
If these guys followed the DD rule, they would be living like I am… but would have a few million fungolas in the bank.
Instead, they have all the trappings of success (and the back-breaking burden of debt that comes with it)… and a bank balance of less than $4,000.
Following DD's #1 rule of money management means that if you have to drive a 10 year old clunker instead of that nice new car you can "afford" to make the payments on… you drive the clunker.
I'll be honest with you… it's not always easy to do this. ESPECIALLY when you start making a few bucks. The temptation to show the world you're a success is a powerful trap.
Just be patient.
You'll enjoy buying the trinket 1,000 more when you pay for it in full and truly own it.
So learn from my mistakes. You'll not only make a lot of money… you'll KEEP a lot of money, too.
All the best,
P.S. I'm going to shoot the first video for my YouTube 30-Day Challenge later this afternoon. Got any suggestions for me?
Great post DD!
After you've save all those hard earned fungolas you may just decide that you don't want it that bad…
True. Especially if you keep it in dollars and watch it being inflated away to nothing.
good post DD
I think you should have ended the article by saying. get out of the USA before its too late.
viva kahunka fitness.
remember this guy LOL
http://www.youtube.com/watch?v=jvOt2Yz9-7o
True 'dat. If didn't let Gary Halbert talk me into coming back I would still be in CR.
Kanunka! lol! I'd forgotten about that guy! Thanks for a good laugh!
Dan,
The Richest Man in Babylon is a brilliant book. I've read it a few times. Even bought the unabridged audio (it's dirt cheap in audio: http://www.booksamillion.com/product/978141934999…
Another great book is The Millionaire Mind. Tom Stanley (one of the co-authors of The Millionaire Next Door) studied the thinking patterns of deca-millionaires and distilled them in this book. Both The Millionaire Next Door and The Millionaire Mind espouse being frugal and being end-cost conscious instead of focusing on can I afford the payment.
Great, great stuff, and, I suspect, in the coming economic times, will be keys to people who don't starve as opposed to people who do.
- John
"It's not how much money you make that counts…it's how much money you KEEP that counts." Or something like that.
Boy did I learn this lesson the hard way. Great post Dan!
Boy, I get a lot of wake up calls these days. This is one of them. Thanks.
About the video, How about a post on getting started as a copywriter. You can see where I am coming from.
Success. I look forward to seeing you speak besides reading your words.
Thanks, Joseph.
Lessons learned the hard way are usually never forgotten.
Good idea, Niels. I'll be glad to do that.
"If I Lived Like A Millionaire I Wouldn't Be One"
I like that.
Ken McCarthy is a smart guy. I've learned a lot from him.
DD, I agree with your post 100%. My husband and I have always lived within our means, even though it meant driving lesser cars and living in a smaller house than most of our friends. We currently have only one debt, the mortgage on our home, and we'll have that paid off in less than 4 years.
We learned long ago that it's okay to be satisfied with what you have. The freedom and piece of mind that we have knowing we can easily meet our financial obligations each month is worth so much more than any material item we could purchase.
Good for you, Susan! I wish someone would have taught me this stuff when I was younger.
Hey Dan,
This issue is definitely close to my heart. Because you see, in terms of financial management, my parents have always been my role models… for what NOT to do.
I mean, we were not poor… I guess financially you could consider our family middle-class. My late father was a civil servant (civil servants in our country were paid quite well) and my mum only worked whenever we needed more money.
My mum even tried her hand at a business for a few years but gave up on it after it caused endless supply & customer headaches. In any case, we lived from paycheck to paycheck. I don't remember my parents having any substantial savings at all.
And whenever there's a windfall, it would immediately be spent. No doubt my dad would spend it mostly on the family, like holidays, electronics and such, but savings, there was none. To make things worse, whenever they wanted to buy something for the house, like new furniture or a home theater system, they would buy it on credit.
To summarise it all, let me put it this way… when my dad passed away a few years ago, I inherited a lot of his debt. So all this experience growing up made me come to a conclusion many years that is similar to yours: Never buy anything if I can't pay for it in cash.
However, a few years ago, I came across Robert Kiyosaki and his work. In particular, I refer to his concept of good debt, bad debt. It all makes sense to me but yet at the same time, it sort of goes against my principle of never buy anything on credit or loan.
Today, I've sort of come to a compromise, but, deep inside me, I am actually not totally comfortable with it. The compromise is that I still stick to my "never buy anything on credit or loan" principle but when it comes to a necessity purchase, like a home, it is ok. Especially in a country like Singapore where the cheapest apartment (which is built by the government) is still above US$100,000.
But in a way, deep down inside, this compromise still bugs me. It is still a conflict within me that I have yet to resolve till today.
So…
I'm curious to find out what are your thoughts on this Dan? Do you agree with whatever Robert Kiyosaki is teaching? I would really appreciate your input.
Thanks!
Andy Iskandar
P.S. For your first video, why don't you talk about the first time you realised that you can actually make it in this crazy world of direct response entrepreneurship if you keep going at it and never let up.
I first leaned about George Clason's little gem about 20 years ago from going to a Jim Rohn seminar. I wish I had taken it to heart though, I might be a little further up the food chain by now. Oh well, I suppose we'll just have to follow that danish proverb: "If you find yourself traveling down the wrong road, turn back!"…thanks for being real once again DD!!!
We may have discovered it late, but the most important thing is we know it now.
It should be required reading for every high school student.
Hi Andy,
Thanks for sharing. This is good stuff and I'm glad you brought it up.
One of my close family members was the exact same way as you described your parents. Still is. He is on the public dole now (socialist security) or he would be homeless.
I have some unusual views on debt and real estate so I'm probably not the best person to ask about good debt/bad debt. I will only teach what I've personally done… and I've never pursued real estate investing. I know people who have made a lot of money using debt to accumulate real estate… and people who have lost a lot of time and money, too.
The bottom line for me is, the borrower is slave to the lender. I never want to be the borrower… only the lender. I realize I'm pretty unusual in my views about that.
So maybe going into debt to control a piece of real estate could be considered a good investment for some. Not for me. Maybe some day I'll look into it but I've always gotten a better return investing in direct marketing projects.
Wanna know what I think is the absolute WORST use of debt? Buying a depreciating asset like a new car. It makes no sense to go into debt for something that IMMEDIATELY loses 10% to 15% of its value the very SECOND you sign the sales contract. That's just plain stupid.
Guess how I know that. Because I've done it… several times! Dumb, dumb, dumb! It's like taking $2,000 to $4,000 (or more, depending on the price of the car!) out of your pocket and setting it on fire.
Here is how I buy a car now:
I let some other sucker buy the new car and take the equity hit on it for the first year or two. Then I come along with cash in hand to buy the car from the sucker (still in new condition) for 40 to 50% less than what he paid for it.
A financially successful person tried to teach me that when I was in my twenties but I didn't listen. Had to learn it the hard way… and it has cost me a LOT of money over the years.
I've been fortunate to learn some stuff about money from Gary Halbert and other secret sources that only about 2% of the wealthiest people in the world understand. Ben Settle has been begging me to start an offline newsletter sharing that stuff. As much as I'd LOVE to start teaching it, this blog is not the right place for it. Most people are not ready for it. Those that ARE ready and open minded would prosper exponentially from it.
Maybe some day.
Dan,
As for that monetary information that only the few know about, I'd personally love to know those details. As soon as you're ready to share…
- John
I'd love to share it. I'll probably have to do it in a small group setting some time in the future.
Apropos to your Rolex comment, I offer a corollary to DD Rule #1: even if you can afford it do you really want it? Every copywriter should know a thing or two about core emotions and desires.
I always THINK I want that stuff… until AFTER I buy it.
I wanted that watch for 15 years. Now I never wear it.
Weird, huh?
dan alot of people think success is measured by your material possesions,,,
i remember buying fellow coworkers lunch cause they had the new cars and houses,etc…
but no money…Dan,…. as grampa GALLY used to say…DAGnabbit DAN, always live below your means…way below!
i have tried to follow this philosophy and most of the times i have come out to the good…most guys i worked with had at least two jobs plus thier wife worked or they ran a biz and worked extra jobs..this sucks! i told myself when i reached a certain income at least at my job i would only spend what i had in the way of cash..i own four cars,none of which are worth much but all payed for with cash,9 motorcycles which i bought over time with cash that i painfully hid away until the right time came,same with my other hobbies like hunting etc…it always been cash or forget it.. my 2 cents J.B. retired firefighter/paramedic..
You were smart to take Grandpa Gally's advice when we were young. I didn't get it until years later.
He gave us a lot of good advice on several subjects. What was his advice for tenderizing tough steaks?
Dan,
What a coincidence!
I'm reading The Richest Man In Babylon right now, I'm about finished and guess what?
I immediatley opened my own Babalonian style savings account (10% goes away every week, I'm the first person I pay). I think it's going to be worth while to save now and have my money work for me later.
Dan, I think you and a few others will like this quote " If I Lived Like A Millionaire I Wouldn't Be One" (Ken McCarthy)
What a philisophy! He gets it, man.
I got a long way to go. I'm 23 and lived like a "millionaire" all through college. It adds up. If I only found this little book 5 years ago…I probably wouldn't have read it anyway! It takes some time to figure out this stuff, sometimes you need to fall flat on your face to wake up.
Thanks for the wake up call,
Out.
Chris
There's an odd sort of satisfaction that takes seat in your soul when you can return the condescending stare of a man sitting in his expensive automobile from your seat in a 10 year old clunker, knowing that you could pay in cash for the same luxuries he has to carry a note for.
For me, every smug prick I run across is a carbon copy of the guy from that old Lending Tree commercial:
http://www.youtube.com/watch?v=hn5EP9StlVA
"How do I do it? I'm in debt up to my eyeballs."
I don't get mad. I pity them.
Dan, another excellent post. And it certainly resonates my philosophy about money and debt. I'm ashamed to say how long it's taken me to fully understand the simple but difficult to do idea of getting and staying out of debt.
Sadly I bought into the "no money down" mortgaged to the hilt real estate investment deal numerous years back. Tenants ate my ass alive. Although the properties were sold years ago, I'm still trying to recover from those deals.
And yea I do believe the average Joe could fair much better learning and investing in a sound direct response project. . . with the proper training . . . from someone who has been in the marketing trenches day in and day out like say Doberman Dan . . .
A great read about living debt free if anyone is interest is How To Survive Without A Salary by Charles Long. With all of the consumerism, easy credit and stuff that's constantly dangled in our faces, Long offers his economic philosophy in an enlightening and entertaining way. I try to re-read it once a year to remind myself that there's a better way to deal with your finances.
Peace,
Emette
i guess shoot a 22 caliber bullet thru it about one thousand times,you know how powerful they are
I think I better read that book. You're the second person who I've heard recommend it within the past couple months.
Thanks, Emette.
Dan,
The Richest Man in Babylon is a brilliant book. I've read it a few times. Even bought the unabridged audio (it's dirt cheap in audio: http://www.booksamillion.com/product/978141934999…
Another great book is The Millionaire Mind. Tom Stanley (one of the co-authors of The Millionaire Next Door) studied the thinking patterns of deca-millionaires and distilled them in this book. Both The Millionaire Next Door and The Millionaire Mind espouse being frugal and being end-cost conscious instead of focusing on can I afford the payment.
Great, great stuff, and, I suspect, in the coming economic times, will be keys to people who don't starve as opposed to people who do.
- John
I remember that commercial. Funny stuff!
[...] Free Yourself From Slavery | Doberman Dan [...]
Hey Dan,
Thanks for the reply. Really gave me some food for thought…
I definitely agree with you about buying a car. That's how I'm going to buy my next car too. I have friends who bug me to buy a nice new luxury car (I dun have a car at the moment) just because I can afford the monthly payment. They are totally missing the point and I simply refuse to listen to them.
Anyway, let me know the day you decide to publish that financial newsletter. I'll subscribe to it in a heartbeat.
Be well.
Hey Dan,
I forgot, there's one more thing I want to share with everybody that I think is extremely extremely important…
Never, never, never ever be the guarantor or surety for a loan. Even if it is a family member.
I learnt that lesson the hard way. A relative died and I was the guarantor for her car loan. I was left to clear that loan. I would never wish that upon my worst enemy… really.
Yeah, it's like those sport trophies we accumulate as kids. Before long they're boxed and in the garage. BUT the season that led up to those awards stays with us forever.
Maybe the same with the Rolex? An expensive trophy, for sure, but symbolic of your "winning season?"
That makes sense. I never thought of it like that before.
I hardly ever wear it out now because it's kinda like wearing a big sign around your neck that says "rob me!"
"If You Can’t Pay For It In Full…
Don’t Buy It!"
That's a really good rule, but I think there are exceptions. My strategy is to split up the payment of as many things as I can. Here in Sweden we may do that in many cases without any extra costs. For example, my dental bill use to be around 3000 kr (about $430). I split that up and pay 500 each month until I have paid it off. There is no chance that I would be able to pay 3000 at one time with my current situation, but 500 a month I can pay without any problem.
There are simply situations where you have to pay something off each month for X amount of months. You simply can't afford a one time pay, and to be without this thing is not an option.
Anyhow, your rule IS a good rule!
Good point, Mikael. If it concerns your health or well being… or that of a loved one… then you have to do whatever you have to do.
This is absolutely spot on. I made the same decision a few years ago and haven't looked back.
Dan,
The Richest Man in Babylon is a brilliant book. I've read it a few times. Even bought the unabridged audio (it's dirt cheap in audio: <a href="http://www.booksamillion.com/product/978141934999…" target="_blank">http://www.booksamillion.com/product/978141934999…
Another great book is The Millionaire Mind. Tom Stanley (one of the co-authors of The Millionaire Next Door) studied the thinking patterns of deca-millionaires and distilled them in this book. Both The Millionaire Next Door and The Millionaire Mind espouse being frugal and being end-cost conscious instead of focusing on can I afford the payment.
Great, great stuff, and, I suspect, in the coming economic times, will be keys to people who don't starve as opposed to people who do.
- John
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